Factory Orders in U.S. Decreased More Than Forecast in March

Last month, Chicago-based Boeing Co. said it had received orders for 39 aircraft in March, down from 179 the month before. Photographer: Stuart Isett/Bloomberg

May 3 (Bloomberg) -- Orders placed with U.S. factories fell
more than forecast in March as a cooling economy slowed demand
for metals, mining equipment and military goods.

The 4 percent drop in bookings was the biggest since
August and followed a revised 1.9 percent gain the prior month
that was smaller than previously estimated, the Commerce
Department reported today in Washington. The median forecast of
58 economists in a Bloomberg survey predicted orders would fall
by 2.9 percent.

Companies are feeling the effects of slowing growth in
Europe, Asia and the U.S., where higher taxes and across-the-board federal budget cuts, known as sequestration, have
restrained consumer spending. Orders could pick up as
manufacturers prepare for improved demand expected in the second
half of the year as employment strengthens.

“We do expect manufacturing to bounce back in the second
half as the fiscal headwinds fade and global demand starts to
regain its footing,” Bricklin Dwyer, an economist at BNP
Paribas in New York, said before the report. “It’s a soft patch
reflecting the impact of fiscal tightening and weak overseas
markets.”

Estimates in the Bloomberg survey ranged from a drop of 4.5
percent to a 0.2 percent gain. The Commerce Department revised
February’s figure from a previously reported 3 percent increase.

Employment picked up more than forecast in April and the
jobless rate unexpectedly declined to a four-year low of 7.5
percent, figures from the Labor Department also showed today.

Payrolls Climb

Payrolls expanded by 165,000 workers last month following a
revised 138,000 increase in March that was larger than first
estimated, Labor Department figures showed today in Washington.
The median forecast of 90 economists surveyed by Bloomberg
projected a 140,000 gain. Revisions added a total of 114,000
jobs to the employment count in February and March.

Today’s Commerce Department data follow a report earlier
this week that showed manufacturing slowing as the need to
rebuild inventories wanes and budget cuts take hold. The
Institute for Supply Management’s factory index fell to 50.7 in
April from 51.3, the group reported May 1. A reading of 50 is
the dividing line between growth and contraction.

Bookings for durable goods, which make up slightly more
than half of total factory demand, fell 5.8 percent in March,
the most in seven months, as commercial aircraft demand fell,
today’s report showed. That was little changed from the 5.7
percent decrease the Commerce Department reported last week.
Durable goods are items meant to last three years or more.

Commercial Aircraft

Commercial aircraft orders, which are often volatile,
slumped 48.3 percent after jumping 86.4 percent in February.
Last month, Chicago-based Boeing Co. said it had received orders
for 39 aircraft in March, down from 179 the month before.

In today’s report, factory orders excluding transportation
equipment declined 2 percent in March after a 0.7 percent
decrease in February.

Orders for non-durable goods including petroleum and food
decreased 2.4 percent, today’s report showed. Because those
bookings aren’t adjusted for inflation they can reflect changes
in prices rather than shifts in demand.

Bookings for capital goods excluding aircraft and military
equipment, an indicator of future business investment, rose 0.9
percent in March after plunging 4.8 percent the prior month.

Shipments of those goods, a measure used in calculating
gross domestic product, climbed 0.5 percent after a 1.8 percent
increase the previous month. Those readings are stronger than
the 0.3 percent and 1.2 percent reported in last week’s durable
goods report, indicating first-quarter business investment may
be revised up a bit.

Spending on equipment and software climbed at a 3 percent
annualized rate from January through March after rising at an
11.8 percent pace in the previous three months, the Commerce
Department’s report on gross domestic product showed last week.